Dow to seek €50/tonne increase for Europe April LDPE, LLDPE

23 March 2011 11:37[Source: ICIS news]

LONDON (ICIS)--Dow Europe intends to increase its low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) prices by €50/tonne in Europe in April, citing upstream volatility as a reason for the move, a company source said on Wednesday.

LDPE and LLDPE prices have risen by €60/tonne ($86/tonne) in March, and by €190–200/tonne so far in 2011, leading to careful inventory control at all levels.

There is a good deal of caution in the polyethylene (PE) market at present, as buyers avoid placing working capital in high-priced stock. Some smaller converters are running at reduced output levels as prices are high and credit limits stretched.

LDPE is now at a record high, above the level it reached in 2008, when Brent crude oil touched $147/bbl.

“There will be fewer working days in April because of Easter,” said the company source, “but April and May are traditionally strong months.”

The high prices in Europe have begun to attract offers of imports, in the form of re-exports from China, a phenomenon rarely seen. However, the difficulty with these offers is the time material will take to land in Europe. Imported prices offered have been attractive to buyers in the current market, but caution is high.

The success of Dow’s price hike for April depends on how competing producers approach the market next month, as the supply/demand balance remains in favour of sellers. In March, some producers aimed to cover only the ethylene increase of €60/tonne, making it difficult for others to achieve more than this.

The picture for April will be clearer once the ethylene contract has settled for the month, and estimates from PE producers are that it will go up by around €20/tonne from its current level of €1,195/tonne FD NWE.

LDPE and LLDPE are used extensively in the packaging and agricultural sectors.